While much of the rest of the world tries to play by the rules of the free market, South Korea has decided to erect a "protectionist wall" disguised as environmental concerns. The new plan to subsidize electric cars for 2026 looks more like a lifeline for the local giant Hyundai than a real decarbonization strategy. Against the backdrop of the aggressive and technological offensive of brands like BYD, Seoul has decided to "tip the scales" through frankly lobbying criteria.
At first glance, the news is positive - state aid is jumping from 5.8 to 6.8 million won (about $4,700). But the devil is in the details. The new rules tighten the requirements for battery parameters in a way that directly hits mainstream Chinese models. While manufacturers like BYD dominate the market with cheaper and longer-lasting LFP batteries, the new Korean regulations favor NCM technology (nickel-manganese-cobalt), which is the focus of domestic players. This is a transparent attempt to make foreign alternatives more expensive and limit consumer choice to the “right” domestic brands.
The additional 1 million won bonus for trading in an old ICE car is also a ruse - it only applies to the purchase of a brand-new electric vehicle, which automatically excludes the more affordable secondary market and forces buyers to enter Hyundai showrooms. Moreover, the threshold for receiving the subsidy will be reduced to 50 million won in 2027, which will force importers to cut equipment or operate at a loss just to fit into the artificially created price corridor.
All this is happening at a time when the Tesla Model Y continues to be a thorn in the side of the domestic industry, and the Chinese Xpeng and Zeekr are already knocking on the door. Rather than respond with better efficiency or lower prices, Hyundai seems to prefer to hide behind the government. Ultimately, the Korean taxpayer will foot the bill for this artificial maintenance of the status quo while global competition continues to surge ahead.